Crude Still A Worry For Markets

Markets opened on a positive note and continued to move up in a slow and steady manner and finally spot Nifty closed 57 points higher at 5520. Market breadth was relatively strong as  advances on NSE were an impressive at 943 as against 487 declines. Among the frontline stocks Infosys Technologies led the market from the front and it got support from other stocks like Tata Motors, HDFC Bank and Bajaj Auto. Tech Mahindra was the surprise winner as it closed at Rs.743 ( went up by Rs.65). With the political stalemate between DMK and Congress getting resolved, a little bit of more short covering will be expected tomorrow. Rising crude oil prices still continue to remain a worry as Libya crisis is still to be resolved. The 200 DMA lies at 5660 and the best case scenario for the bulls would be a rally till this level. The journey to this level is however not expected to be smooth as higher levels would definitely see intense selling . Crude is the biggest worry for the market and market movements will hence be extremely volatile and choppy till this issue gets resolved.

The best strategy in the current scenario would be to adopt a trading approach in frontline stocks and investment in midcap and smallcap stocks postponed till the 200 DMA is decisively crosses. One should stay in cash and there is no hurry to invest into the market. Short term preferably intraday trading is what one should follow.

Nifty futures will face resistance at 5562, 5620 and 5660 levels and strong support on the downside lies at 5495 and 5465 levels.

No Respite From Carnage

Friday session put paid to all expectations of bottoming out as benchmark indices nosedived. It looked like for first four days of last week as if 5400-5450 would prove to be a formidable support zone but one-sided move on Friday was enough to push even the hardcore bulls in a corner. Nifty lost over 130 points to slip below 5400 while Sensex shut shop just around 18k. This was the worst close in around 6 months. Carnage was seen across sectors as sentiments turned hugely negative towards the later half. On weekly basis, it was the relatively safe sector, FMCG was the worst impacted. BSE FMCG index lost over 6% during the week as investors sold heavyweights like ITC and Levers. Realty, Auto and the IT were the other ones that suffered the most, losing around 3% each. BSE metal index managed to eke out marginal gains on a relatively better show by Hindalco, NALCO and Tata Steel. Again, the global backdrop was positive as US indices moved to new post-Lehman highs. Local issues continued to bother investors.

Our expectations that Nifty might have seen a credible low around 5400 and we could see a sustainable rebound came to nought on Friday. The sheer momentum of the fall was unnerving as Nifty collapsed almost 185 points from its intraday high of 5556. Fall was aggravated due to weekend unwinding as traders rushed to square off any long positions. The fact that the worst impacted stocks were the ones that had held on relatively well suggest that investors and traders are in a panic mode now. The momentum is usually at its highest closer to the peaks as well as bottoms. Again, despite the sharp fall on Friday we do believe that Nifty might be closer to bottoming out though the momentum suggests otherwise. We have already seen correction of around 15% from November top and usually the normal corrective moves are of 12 to 17% magnitude. Then as already suggested on earlier occasions also Nifty provided stiff resistance between 5350 and 5500 when we were trying to move higher. As an INVESTOR with at least 6 months view it would be advisable to invest a part of investible funds in companies that have shown good quarterly numbers. As a trader the momentum is still down and it would be better to wait for some bottoming out patterns to emerge before attempting long positions. 

Nifty now has immediate resistance around 5440-5450 while immediate trend would change for better only on a sustained breakout beyond 5550.

Bulls Have A Good Day At The Markets

Bulls had a great outing after what seems like a long time as Nifty leapfrogged by more than 100 points. After a steady opening markets gathered momentum as the day progressed. Banking stocks were in fine fettle and the sector was led by SBI as the stock moved up smartly. Bank Nifty gained almost 3%. Major banking gainers were Dena Bank, Vijaya Bank, OBC, Yes Bank, Central Bank, Union Bank and DCB. Cipla was one of the biggest gainer as it made a fresh new high. Tata Motors led the rally in auto stocks as it rallied strongly to around Rs 1300. Metals made a strong comeback on positive data from China. JSW Steel gained 7% and others like Tata Steel and Hindalco were also significant gainers. Some of the other prominent gainers were IOC, IVRCL, Punj Lloyd, Orbit, Bhushan Steel, Suzlon, Dish TV, MLL, GMR Infra, Aban, Bharat Forge and NCC. Hero Honda was the biggest loser as it dropped almost Rs100 from its intra day peak. Other losers were Mphasis, Bharti and Sesa Goa. 

Nifty consolidated around 5920-25 in the early trades and then moved up gradually to around 5970. The resistance at 5920-30 was taken out without much effort as global sentiments also helped. We are staring at 6000 again and it’s likely that Nifty could rally to around 6030-40 soon. Banking has again taken the lead and the rally in banks could continue. Dish TV moved to fresh 52-week high and is looking good for more. Stock could target Rs 80-82 within this move. Petronet LNG is likely to target Rs 130 while more upside is also seen in ABB, Central bank, ABG Ship( above 425), IFCI( above 65), Indusind Bank, Videocon( above 232), Divis, Aurobindo and Bata.

Nifty has support around 5910-20 and then around 5865-80 while resistance is likely around 6030-6040.

Markets on 22 Nov - Nifty Bounces Back

Nifty bounced back strongly to regain level of 6000. After a slightly positive opening, market traded nervously around 5930 for 2-3 hours before gaining strength and momentum as the day progressed. The second half was particularly convincing for bulls as Nifty moved past 5960 and then 6000. Recovery was led by IT, Autos and Banking stocks and later it spread to almost all sectors. Fertilizer stocks however were under pressure and were amongst the biggest losers. S Kumar’s was the biggest gainer amongst the derivative stocks as it zoomed up by more than 12%. Other major gainers were Uco bank, Triveni, Havells, Ruchi Soya, Indusind bank, Srei Infra, KFA, IDFC, Dena Bank, Escorts, Wipro, JP and Kotak bank. 
 

Nifty came close to 5900 during the day but managed to sustain above that and staged a smart recovery to close more than 2% higher at 6010. 5930-5950 again becomes a crucial and significant support in the short term. Market has been making these one day kind of moves and it would be difficult to call a bottom for now but probability is on higher side that we may have hit a credible bottom on Friday. 6040-50 is the next level to watch out for as it did provide resistance last time around. So, broadly we are looking at 5930 as a support on the downside while watching out for 6050 to provide some resistance. Sustained move past 6050 would further confirm the analyses that uptrend has indeed resumed. Tata Steel looks bullish above 625 and might challenge the resistance at 650-55 again. In number of stocks 3-day bullish set-ups are in place now and would be confirmed over next couple of days. The list includes Havells, KFA, Indisind Bank, Escorts, REC( above 366), Jain Irrigation( above 220), Exide( above 170) and Can Bank.

 Nifty has support around 5960-70 and then around 5925-30 while fresh momentum is likely above 6050.

Markets on 17 Nov 10 - Nifty Collapse

Nifty collapsed in the midsession after a relatively quiet start to the day. The sell off was once again across the board as basket selling was seen in Nifty counters. Nifty tried to stay above 6040-50 but weight of selling ensured a steep decline below 6050 and even below 6000. Nifty collapsed to 5970 before staging a weak rebound to close below 6000 at 5988. Nifty seem to be crucially poised at current levels as the levels of around 5950 have been providing support for past 10 weeks now. Any sustained trades below 5950 would fuel further unwinding and forced bull liquidation. The global cues continue to be negative and there have been renewed fears of Euro zone panic as well as some emanating from China. Next couple of days of trade could be significant and provide cues for future direction. In our view, intraday panic might see Nifty breach the levels of 5940-50 and might even see it drift to around 5875-80. But as of now it seems that market is likely to see a significant rebound and might not see a close below 5950. This volatility could be used by big position players to roll over their positions to next series. In case of the above scenario works out it would be prudent to wait for Nifty to rebound above 6000 to build small positions in resilient and stronger stocks. 
 
Nifty has support around 5940-50 and then around 5870 while resistance is likely around 6050.

The Markets on 12 Nov 2010

It was a tough day for bulls as market headed southwards after being in a sideways mode for past few sessions. It was a slow grind mid session but the downward momentum picked up in the last 60 minutes as Nifty decisively slipped below 6250. All round selling accounted for weakness in Nifty that fell to as low as 6180 during the day. DLF lost over 4% while other significant Nifty losers were JP Associates, Cipla, Bharti, Bhel, TCS, Tata Motors, RIL, HDFC, Wipro and HDFC bank. As the list suggests all major sectors were affected by the negative sentiments. These sentiments were probably triggered by huge selling by FIIs in Korean market.  Standout stock of the day was RPower that powered its way almost 10% higher on huge volumes. Company has managed to get international financing at extremely reasonable interest rate. Then there were stocks like Lupin, Indusind Bank and LIC hsg that  reacted positively to inclusion in MSCI. Some other gainers were Bata India, ICSA, Hindalco, Syndicate Bank, Uco Bank, Tata Power, DCB and Reliance Infra. Mid caps too cracked in the later stages and shed significant weight. 
 

Nifty did breakout of the range of past few sessions but the direction was not as per our expectations and analysis. Nifty broke down below 6240 and in fact almost reached the targets for this breakdown during the day itself. The technical targets for range breakout was about 70-75 nifty points (around 6170). Now, the 6145-6170 band assumes a lot of significance for Nifty as the current breakout occurred above 6150. While an intra-session breach of 6140 cant be ruled out completely, inability to sustain and close above 6150 could put the current leg of rally in serious doubt. We believe that for markets to scale new highs stocks like RIL, HUL, Tata Steel and ICICI would have to assume leadership. RIL has strong short term support at 1065-70 while HUL sees a significant breakout beyond 315. 

Nifty has support crucial support around 6150-70 while resistance would be seen around 6250-60 and then around 6310.